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Handicap Van Company Shut Down

Van maker Vehicle Production Group — recipient of a $50 million loan from the U.S. Department of Energy — has suspended operations and is in the process of being sold, its former CEO said. We have watched this company closely here at the Car Pro Weekly. Most recently, we covered the company because they supplied vans to the Dallas Area Rapid Transit System.

The Allen Park, Mich., company, which made MV-1 vans for the disabled, terminated about 100 workers and closed its offices in February.

Former CEO John Walsh said in an interview that two companies in the “automotive space” are interested in VPG, with one being a current partner that “has a lot to do with building the car.”

The statement suggests AM General, a manufacturer of specialized military and commercial vehicles like the Humvee, which was contracted to assemble the MV-1 in Mishawaka, Ind. AM General also assembles Ford’s Transit Connect Electric wagon.
An AM General spokesman couldn’t be reached to confirm.

Once the VPG’s assets were frozen after falling below the cash threshold set by the government, Walsh said halting operations was the best move.

“It was the right thing to do for the employees,” Walsh said. “Many people were going to continue to work there but not be paid, and I couldn’t sleep at night having that happen. It was the best financial decision to suspend the business.”

VPG was able to attract some of the U.S. auto industry’s most senior talent after it was formed in 2006, including former CEOs Dave Schembri, one-time head of marketing for Mitsubishi and president of Smart USA, and Mark Hogan, a former General Motors executive who will become a Toyota Motor Corp. director in June.

The rear-wheel-drive MV-1 was designed for individual wheelchair users and fleets. It’s powered by a Ford 4.6-liter V-8 engine and can run on either gasoline or compressed natural gas. It’s built on a platform originally intended for a taxicab.

The loan funded assembly of the compressed natural gas version of the MV-1.
VPG hasn’t filed for bankruptcy, and Walsh said he wants taxpayers to know their money was well spent.

The company, which built 2,500 vans and raised $400 million in capital, still has a “big build up” of momentum, Walsh said. He said VPG still has a backlog of 2,300 orders. VPG last year finished drawing down its full government loan amount and didn’t make any repayments, Walsh said.

The van has a deployable access ramp with a 1,200-pound weight capacity and 36-inch entryway. It can hold up to six passengers with an optional jump seat, including one or two wheelchair passengers and the driver.
Walsh said VPG executives ran out of time in getting funds in place, but he’s optimistic about its future: “It just needs a little more cash infusion.”
VPG, which Walsh said has three employees left out of about 100, failed despite winning a regulatory decision in December that Chrysler Group said would create a monopoly on selling wheelchair-accessible minivans to U.S. transit agencies.
VPG’s shutdown, paired with plug-in hybrid carmaker Fisker Automotive Inc.’s failure to make a payment on a loan from the same Energy Department program last month, is adding to congressional criticism of clean-energy lending that became a target after the 2011 bankruptcy of solar-panel maker Solyndra LLC.
VPG was awarded its $50 million in March 2011 from the same Energy Department program that approved $529 million in loans for Fisker to develop plug-in hybrid cars. Ford Motor Co., Nissan Motor Co. and Tesla Motors Inc. were the other three recipients of assistance from the program.
VPG’s loan was the smallest and last made from the program; the largest was Ford’s $5.9 billion. Fisker used $193 million of its money before the Energy Department froze the remaining amount for not meeting production milestones.

The Energy Department defended the loan program, saying its successes outweighed its failures.

“Overall, our portfolio is performing well, and as a result, many ‘first of a kind’ technologies that seemed risky three years ago are considered safer bets today and are being rapidly installed around the country,” said Aoife McCarthy, an agency spokeswoman.

The loan losses are “a small fraction” of the reserve Congress established to cover bad investments “and we are helping valuable new technologies gain a toehold so that America can win the global race for clean energy jobs,” she added.

VPG had said it would produce about 6,000 vehicles this year. The company hasn’t produced vehicles for about six months, Walsh confirmed.

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